tv BBC Newsnight WHUT January 9, 2011 8:00am-8:30am EST
>> this is bbc news tonight. >> "bbc newsnight" is presented by kcet, los angeles. funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. the john d. and catherine t. macarthur foundation. and union bank. >> union bank has put its global -- its financial strength
to work for a wide range of companies, from small businesses to major corporations. what can we did four years? >> and now -- >> year road,. can the euro make it through 2011? this week, will this be the last year for the european currency? we look at the big picture. >> the country everybody is worried about now is spain. >> we ask a finance minister if she thinks some countries will have to be kicked out of the hero zone. >> we are trying to force the major issues and trends globally in the coming year.
>> and we will discuss the waning power of asia. >> asia is where the economic growth will compound over the next year or two. >> hello and happy new year. 2010 was the year the bureau crisis started. could 2011 be the year the euro falls apart? george osborn told european finance ministers that the bureau needs to get the house in order. >> here they come. ed >> no. >> wellcome. >> it is just nine years since i've watched the first notes,
now in the middle of a euphoric crowd. now the euphoria has stopped. ed there is a credit problem of the court. last year showed the fold, bailout, and contagion. the pictures showed anger and unrest. will this be the make or break year for the -- the euro? >> europe's problem countries are still giving cause for concern. greece is struggling to meet the conditions of the bailout. social unrest is rising. ireland -- its banks have been facing penury for a generation. the country everyone is worried about now is spain. over the next three months, spain and portugal have to raise 225 billion euros on the
bond market. both countries have been downgraded by credit agencies. spain's problem is not its deficit. it is lack of growth. high unemployment. a collapsed housing market. shaky banks. spain is certainly to come under pressure just as greece and ireland did. you could write the script for the spanish debt crisis now. a downgrade, denialsbailout, sms conferences by elected officials who run the euro zone. they know they have to be decisive, to impose common rule and to act fast. the commitment to the idea of the euro has to be backed up with action. germany above all will have to
get its act together. it has been pushing this man, axel faber, to run the european central bank. this could be a strong signal that germany wants to be a range of currencies on its own, german, terms. yet europe is facing more than a sovereign debt crisis. it begins to feel like an existential crisis. though estonia drawing to the -- the euro on new year's day, it is hard to see any big country joined anytime soon. and then there is turkey, caught in a backlash that says this far and no further. all across europe, migration fuels resentment, forcing a rise in populist parties that reject the eu project altogether. there are only two people who
matter -- on the lumber tell and sarkozy -- angela merkel and sa rkozy. right now their visions of the future cancel each other up. what is missing is a vision of what europe might look like after the crisis is over. in the process of sorting alex the euro, the leaders are shredding the progress they made under the old social model. and there is trouble about that. one thing that could guarantee the euro survives is world growth, if world conditions dragged spain, portugal, greece, and ireland out of the minor. but with inflation rising in the the euro zone, there is the
potential that the banks will choke off growth there are worries about bad banks and incoherent policies. >> i have been speaking to france's finance minister. i asked her whether this was a make or break year for the euro. >> we went through 2010 with no major hiccups. certainly, it is what i would call typically a major transgression. it has been put a new place to help countries under severe attack. >> you are saying every country in the euro zone at the end of the year -- will decrease still be there? >> yes, absolutely. it is no question in my mind. >> but will the debt be
restructured? >> i have addressed the question because of the euro group, and will see you grow group e comprising all 17 members, including estonia that just joined on january 1? there will be no restructuring of debt before the end of the year. >> isn't it a huge problem to impose such a level of austerity? there is the danger to democracy? >> i saw the prime minister of greece this morning. the prime minister of greece was explaining what new measures will actually be implemented on increase, that address -- implemented in greece that address restoring the competitiveness to the country. >> isn't it a problem though
that it is at enormous social cost? in a sense, for the sake of a political project that economically has never worked? >> for a political project to work, he must have an economic base, and we need to restore and make sure we maintain economic, a sound basis. to do that, we need to do a few things. we need to address public finances. businesses. fight the increase of the country's debt. second, we must increase the competitiveness. >> you would like a much closer economic model among the countries, a much more cohesive economic policy. that is not what germany wants. >> what makes you say that? i think france and germany
together are very keen that the stability and growth criteria and principles be respected. that is what we want to apply in our respective countries. in addition to that, my president, nicolas sarkozy, once our tax policies and our tax principles to be more closely aligned with those of germany, whenever that is likely to make us more competitive together. i am saying that france and germany are determined to work much more cohesive play -- so easily together. >> are you saying that actually germany and france now have a cohesive economic policy? >> we are working with a view to having a much more cohesive economic policy, and we certainly have together the objective of securing the zone
as much as we can. >> do you think that the german people, the french people will be happy to see their countries have the same economic policy? >> as it serves the people in both countries, so that there is more employment, so that the purchasing power is maintained and, if possible, improved, and if there is creation of value by each of those two economies, guess, of course. >> and did the people of france and germany vote for that convention? >> the european project, as you know, has been around for over 50 years. it was built on the back of the situation where people were at war. killing each other. the european project is something we all believe in, simply because you want peace to be maintained in that zone, and
you what, and prosperity together. >> when historians look back in 2011, will be remembered as a year when the chinese currency caused turmoil in the world market for when india ruled as a world superpower or when iran from nuclear ambition triggered a nuclear strike? here are predictions. >> we saw it in 2010. not just because of the new austerity caused by the financial crisis. the politics of insolvency have asserted themselves. it has created strong leadership from the rising powers. and there is talk of the more multipolar world, one in with the overwhelming dominance of the u.s. has been superseded by a more complex and chaotic
relationship between countries. later this month, iran will meet with its national negotiators in turkey for further talks about its nuclear program. iran still has not formally rejected the international offer to process enriched uranium abroad. in time, pressure will build to increase sanctions, perhaps even military action in 2011. >> the iranian government must develop a credible presence and confirm to the world a peaceful intent of its nuclear program. >> but it is not just the nuclear issue. iran has a certain assertiveness as our regional player. we learned from the with the
latest disclosures that americans had been unable to stop the assaults in lebanon. also that the government in that country is afraid that has a lot has said of the sun -- hezbollah has set up its own organization. we also learned of the power of saudi arabia, urging that america cut off the iranian snake's head. western commentators wonder whether the u.s. or israel might attack iran, but we need to ask whether iran itself will provoke a confrontation. there was a nuclear issue in lebanon, or through its allies in gaza. elook at the way the saudis or the lebanese have courted the iranian leadership. we now know what they think privately about the iranians.
they are forced into strange public demonstrations of friendship, as u.s. forces moved to complete withdrawal from iraq to re-head -- . turkey is moving away from the american camp. it had improved relations with iran, too, but seemed intent on carving of a role for itself as a regional player in its own right, hence its bid for nuclear talks. elections in july should provide an opportunity to test the strength of political islam in turkey and to see whether they are keen on the idea of joining the european union. influential turks find the long waits for membership humiliating an increasingly see europe does --
let's go east to afghanistan. the american drawdown had been scheduled for july, and now we are being told to expect some more symbolic reduction, with afghan security forces. americans will search for indicators that things are getting better, but they have not appeared yet, and it may not be until the u.s. takes a back seat in operations that american casualties go down. at the british on the other hand have declared themselves cautiously optimistic with the improvement in security, and the scene may be set for our routine for what has happened in iraq with the british charging with an accelerated pace towards exit, what the americans insist that things are not good enough yet and they have to stay awhile longer. east again to india.
it will be a big year for the world's biggest democracy. ed the world cup in mumbai will draw world attention, but might it also prompts another terrorist outrage? the one in 2008 indicated the weakness of the indian states. but is that weakness itself capitalism? india is expected to grow faster economically than china, so we can look forward to more british ministerial visits as the camera and government tried to get a slice of the commercial action -- as the cameron government tries to get a slice of the commercial action. ed commercial interests will get higher priority. so, we iran in china.
the issues are probably well beyond us. in a way, nothing better represents the shift of power then the relationship between the world's biggest importer and the biggest exporter. the u.s. insists the chinese currency is being kept officially love. many congressmen believe that is harming job creation. many economists feel that argument is overdone and rising costs in china, such as wages and energy, are blunting their international effectiveness anyway. so what will happen? well, the chinese agree that their currency is being kept to love, but letting it rise swiftly would be damaging -- is being kept too low, but letting
it rise swiftly would be damaging it depends much on whether they can forge consensus about their economy or become increasingly ill tempered in their rivalry. ed as power becomes more diffuse, so does leadership. the u.s. and europe will find it harder to gain consensus and exert influence. they will be surprised more often. it may be that 2011 won't produce the moment th defines the defining power of the west, but that process will continue >> to discuss the big 2011, i wd by the former chief of staff of the british prime minister tony blair and by stephen hadley. let's talk about china and the economic context, in addition to
america. have you see the economic relationship? >> obviously, since the financial crisis in 2008, we've seen the emergence of china as an economic power. i think it is invested in asia as a whole. that is driven by china, india, indonesia, and the like. it is an indication that the united states and europe would need to address in your head. >> politically, america and others want china to step up to the plate and take a bigger role. do you think there is a reluctance there? >> i think the interesting thing that has changed in china is they have become more assertive. now they are being more
assertive, and there are in tensions with india, vietnam -- >> tensions? >> border tensions. >> i do think it is a very public thing. you have a lot of poor countries becoming richer. it is not quite timmy stepping up to its responsibilities in the world. -- it is not quite to me stepping up to its responsibilities in the world. i do think for a start, they will play an active role in the calibrating the relationship this year. >> and wish what they were saying was more different. i do think they will have a more active role. >> something has to happen with iran this year. something serious. we know the invitations have gone out to the eu and russia and china. ewill be the rhetoric about iran
this year? >> people say "when iran has a nuclear weapon." think the critical point will be when the international community cannot prevent iran from having a clear path to a nuclear weapon represented by the enrichment facility. i think the challenge for the international community will be to step up sanctions and make them so tough the iranian leadership realizes they cannot both have their regime and their nuclear program, and they decide to give up the ladder. the question is whether the international community can beef up the sanctions to that point and avoid having to look at more draconian measures like the use of military force. >> de think there will be any use of military force that's what i do not think america wants israel to do. we cannot stop iran. we might be able to persuade them. >> the war in terror is very
much focused on afghanistan. a drawdown supposedly next year. symbolic for real? >> i do not think it will be a real drawdown. the talks should have started earlier. we had the experience in northern ireland with the ira. it took a long time with a group like this. we should start now but not expect a major outcome. the fighting will carry on at the same time. >> america will be, of course, publicly, at its head. you have to have channels. do you agree with that analysis? >> sure, and there is going to have to be a settlement about these things. we saw iraq. it will not be formally sitting down at a peace conference table, but there will be local conversations with taliban and other insurgent, and the goal will be to bring them up of the insurgency, to give up their
arms, and focus on those elements that are irreconcilable. that is the process by which all of these insurgency's ultimately in. >> is going to take a lot of time, but it is plausible. >> america wants the eu to bring turkey in >> we should bring turkey but it is not going to. the other countries do not want it. in my experience, they have the first modern leader of turkey. it is making a real difference. he is trying to do the right thing on kurdistan and cyprus. >> what will happen? quacks' turkey could get more house style. ed -- >> turkey could get more hostile. it will need lots of compensation if it is not going to go the wrong way.
>> obviously the eu should take turkey in. it is not a u.s. decision. i think it is overstated to say turkey is moving east away from the west. we talk about turkey as a bridge between east and west, and we now have a prime minister and foreign minister who are trying to see if they can play that role in brokering tensions between east and west. i think they have had some missteps. i think there needs to be closer cooperation between turkey and europe and the united states, but think you will see that in your head. >> i need to ask you, stephen hadley, we were talking more generally about america's declining influence in the world -- marginal, of course. israel and palestine. what you think president obama's attitude should be? >> i think he will remain
engaged. they have to stop talking about the issue of settlements and start talking about the terms of the peace. i think that is what the administration has undertaken. i think it is positive that the secretary of state clinton has -- is going to be more actively engaged. i am encouraged they will make progress. >> briefly -- to you think there will be a crisis in the year rose zone. -- do you think there will be a crisis in the euro zone? >> i think there will be more tensions. but not a real crisis. >> angela merkel said "making noises about the future of the euro." >> they should have made noise about it earlier. >> what area of countries will come into the euro zone this